U.S. ups the pressure on European Union in airline row

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Last Updated: Thu, Jul 26, 2012 18:10 hrs

By Valerie Volcovici and Barbara Lewis

WASHINGTON/BRUSSELS (Reuters) - Washington will ratchet up the pressure next week to find a global solution to a bitter row over an EU law that makes airlines that use European airports pay for carbon emissions.

In the U.S. Senate, the powerful commerce committee will hold a vote on Tuesday on a bipartisan bill that would make it illegal to comply with the EU law.

"We hope it will further signal to the EU that there continues to be deep opposition in the U.S.," said Nancy Young, vice president of environmental affairs for lobby group Airlines for America (A4A).

At the same time, the U.S. State Department and Department of Transportation will hold a two-day meeting on Tuesday and Wednesday to try to accelerate efforts within the U.N.'s aviation body - the International Civil Aviation Organization (ICAO) - to come up with a solution acceptable to all sides.

The meeting will bring together 17 non-EU nations opposed to the EU law, which since the start of this year requires all flights in or out of Europe to pay for their emissions, using the EU's Emissions Trading Scheme (ETS).

U.S. sources said the meeting will take a different tack from previous gatherings of ETS opponents, referred to as the coalition of the unwilling, because rather than drawing up lists of retaliatory threats, it is seeking an alternative way forward.

"I choose to take the Americans at their word that they will use this meeting to create constructive input to ICAO," EU Climate Commissioner Connie Hedegaard told Reuters.

The European Commission has repeatedly said it only imposed its law on all flights because more than a decade of ICAO talks failed to deliver a global plan to cut carbon emissions.

Now, however, both sides are looking to the UN body to come up with an alternative solution.

The Commission has said it would waive its requirements if the ICAO can produce a global scheme to curb rising airline emissions.

The ICAO has a window of a few months to achieve convincing progress before tempers really fray when the EU begins collecting, which is expected in April next year.

"There is a sense of urgency because airlines have to start paying next April. We hope there will be a resolution that becomes clear enough before then," said Russ Bailey, a senior attorney for the Air Line Pilots Association, a U.S. lobby group.

MUST BE EFFECTIVE

Environmentalists underline that any global market-based measures decided by ICAO must be as effective as the EU's ETS, which although weakened by an oversupply of tradeable emission permits, has had an impact on reducing emissions in the sectors it covers.

"It's good they are actually talking rather than just throwing stones at the Emissions Trading Scheme, but we're looking for a constructive discussion and a target which is environmentally meaningful," said Bill Hemmings, programme manager at Transport & Environment campaign group. "The fact the EU has been excluded has to be a red flag."

Opposition to the EU imposition of the trading system on airlines is one of the rare issues that has united both political parties in the United States.

Republican Senator John Thune's European Union Emissions Trading Scheme Prohibition Act has the support of the commerce committee's Republican members, as well as some Democrats.

It is similar to draft law the House of Representatives approved last year to shield U.S. airlines from paying for the greenhouse gases they emit from flights in and out of Europe.

To become law, the draft legislation has to be adopted by both the House and the Senate and then signed by Obama. If passed it would put airlines in the impossible situation of being in breach of either U.S. or of EU law.

So far U.S. airlines and most other carriers have met preliminary EU requirements, although Chinese and Indian airlines flouted a deadline to report emissions.

A spokesman said the European Commission was "following up and engaging with both countries' authorities."

While governments have opposed the EU law on the grounds it breaches sovereignty, the aviation industry has taken issue with the extra financial burden on an industry battling economic downturn.

In many cases, the cost - calculated at only around 2 euros per passenger for a flight from Beijing to Frankfurt, for instance - has been passed on to customers.

The options under consideration at ICAO include using carbon offsets, or credits earned by reducing emissions elsewhere, and a new global ETS to regulate airline pollution.

European aircraft manufacturer Airbus said the EU should not take a regional approach to solving global problems such as climate change.

"A global issue needs a global solution. Regional action does not address the issue properly and leads to distortion of competition," an Airbus spokesman told Reuters.